ATP is the independent organisation that administers Denmark’s labour market supplementary pension scheme, with around E40bn under management, as well as the country’s new special pension scheme, SP. Started five years ago, this scheme collects 1% of the salaries of all Danish citizens, and has currently amassed around E6bn which it manages in a centrally controlled fund. Last year, Danish parliament passed legislation that will entitle citizens from 1 January to choose where their money in the special pension scheme is invested. To facilitate this, ATP is currently building a E30m technology infrastructure that will hold each citizen’s money in a separate account and allow them to direct its investment via the internet.
“We have had to invest in a brand new IT system because we have to individualise all the money in the scheme, with individual savings, costs and taxes,” says Thor Kleif, ATP’s general manager.
To construct the system, ATP has bought those components of the system where there were third-party offerings, but has had to build the elements that are unique to the system itself, in particular the components that collect money in from the Danish tax authorities and individualise it. To manage the 3.3 millions citizens’ accounts, ATP purchased a generic pension systems from Danish financial services software specialist FDC. To handle pension holder enquiries, it has bought a customer relationship management systems from US corporate applications supplier PeopleSoft, and to manage the workflow of processes involved in the new scheme, it has implemented a business process management systems from Texas-based specialist eiStream. Finally, it is in the process of contracting a specialist developer, which it would not name, to build the web user interface.
The project is about halfway along, says Kleif. The FDC system is installed, with work underway on the other components. Although the deadline is tight, Kleif says that ATP expects to complete development work by about 1 October, and to be ready to go live on 1 January.
Once up and running, members will be able to choose to leave their savings to be administered by the ATP, or have their money handled by other portfolio managers. ATP is proud of its track record as a low cost provider of administration services – it currently charges around E5 a person a year, or 0.05% of capital, for administration, both for the supplementary pension scheme and the new special pension scheme, so it believes that it will offer a very competitive service compared with other pension funds.
"We want to facilitate an informed choice for our customers, and we want to offer the cheapest choice - we want most of the money to go to the pensioners [and not to the administration of the_system],” says Kleif.
ATP’s new system borrows many of its ideas from Sweden’s PPM scheme (see main story). “We got a lot of inspiration from Sweden,” says Kleif. “There is a trend in Europe for people to ask for more choice [in how their pension is_invested], and so we are trying to offer more free choice in the Danish pensions system.”